International

MSA Safety Announces Fourth Quarter and Full Year 2020 Results

 MSA Global safety equipment manufacturer MSA Safety Incorporated (NYSE: MSA) today reported results for the fourth quarter and full year of 2020.

Quarterly Highlights MSA

  • Revenue was $388 million, increasing 3 percent from a year ago on a reported basis and 2 percent on a constant currency basis.
  • GAAP operating income was $19 million or 4.8 percent of sales, compared to $40 million or 10.7 percent of sales in the same period a year ago. Adjusted operating income was $67 million or 17.3 percent of sales, compared to $65 million or 17.3 percent of sales in the same period a year ago.
  • GAAP earnings were $12 million or $0.31 per diluted share, compared to $31 million or $0.79 per diluted share in the same period a year ago.  Adjusted earnings were $50 million or $1.27 per diluted share, compared to $51 million or $1.29 per diluted share in the same period a year ago.
  • GAAP operating income and earnings includes a pre-tax charge of $34 million associated primarily with an increase to the company’s cumulative trauma product liability reserve, compared to a pre-tax charge of $18 million in the same period a year ago.
  • Operating cash flow was $96 million, increasing 26% from a year ago. The company realized a 320 basis point improvement in working capital from the third quarter of 2020.

Annual Highlights

  • Revenue was $1.35 billion, decreasing 4 percent from a year ago on a reported basis or 3 percent on a constant currency basis.
  • GAAP operating income was $167 million or 12.4 percent of sales, compared to $186 million or 13.3 percent of sales in the same period a year ago. Adjusted operating income was $243 million or 18.0 percent of sales, compared to $251 million or 17.9 percent of sales in the same period a year ago.
  • GAAP earnings were $120 million or $3.05 per diluted share, compared to $136 million or $3.48 per diluted share in the same period a year ago.  Adjusted earnings were $177 million or $4.50 per diluted share, compared to $188 million or $4.80 per diluted share in the same period a year ago.
  • GAAP operating income and earnings includes a pre-tax charge of $39 million associated primarily with an increase to the company’s cumulative trauma product liability reserve, compared to a pre-tax charge of $27 million in the same period a year ago.
  • Operating cash flow was $207 million, increasing 25% from a year ago. The company continues to execute a balanced capital allocation strategy focused on growing its business and returning value to shareholders. For the year, MSA invested $49 million in capital expenditures, paid down $44 million of debt, funded $67 million of dividends to shareholders, and deployed $20 million for share repurchases.

Comments from Management

“Our organization finished out a challenging year with strong fourth quarter performance that resulted in record revenue for the quarter, double-digit growth in cash flow, and a healthy backlog to enter 2021,” commented Nish Vartanian, MSA Chairman, President and CEO.  “Along with protecting the health and safety of our 5,000 associates, we remained focused on three key deliverables throughout the year:  developing the most advanced safety technologies for our global customer base; driving operational excellence programs to improve our business model; and using our strong balance sheet to make investments that enhance our leadership positions in key markets,” he said. Mr. Vartanian added that MSA’s full year adjusted operating margin improved 10 basis points to 18 percent of sales, despite the 3 percent revenue decline associated with the pandemic and recession. “Overall, our diverse product portfolio and focus on continuous improvement drove strong performance in a challenging environment.”

MSA’s quarterly results include 10 percent revenue growth in firefighter safety products, a defensive market segment that has performed well through a broad range of economic conditions. “From our break-through G1 and M1 breathing apparatus platforms, to the recent acquisition of UK turnout gear leader Bristol Uniforms, to the upcoming launch of MSA’s cloud-based Connected Firefighter platform and LUNAR system – which will create a new standard for firefighter accountability – we’ve made significant investments to help protect firefighters from head to toe with the most progressive technologies being developed today,” Mr. Vartanian explained. MSA completed the Bristol Uniforms acquisition in January 2021.  The transaction, valued at approximately $60 million, expands MSA’s addressable market in the International fire service business.

In addition to the recent acquisition, Mr. Vartanian noted that profitability improvements in MSA’s International segment were an ongoing highlight for the company in 2020.  Adjusted operating margin in the segment expanded by 320 basis points in the fourth quarter and 270 basis points for the year. “Our restructuring investments and continuous improvement culture continue to yield strong returns across our International business,” he said.

“Protecting the health and safety of workers around the world has never been more important or more relevant than it is today, and our team remains committed to advancing our mission,” Mr. Vartanian said.   “Our new product development pipeline, our focus on continuous improvement, and our strong balance sheet position us to continue to deliver value for our customers, employees, and shareholders in 2021 and beyond,” Mr. Vartanian concluded.

MSA Safety Incorporated

Condensed Consolidated Statement of Income (Unaudited)

(In thousands, except per share amounts)

 
 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

        

Net sales

$

388,248

  

$

375,255

  

$

1,348,223

  

$

1,401,981

 

Cost of products sold

228,976

  

208,410

  

757,775

  

765,369

 

Gross profit

159,272

  

166,845

  

590,448

  

636,612

 
        

Selling, general and administrative

76,268

  

85,165

  

290,334

  

330,502

 

Research and development

16,545

  

16,366

  

58,268

  

57,848

 

Restructuring charges

8,906

  

2,643

  

27,381

  

13,846

 

Currency exchange losses, net (a)

4,757

  

2,476

  

8,578

  

19,814

 

Product liability and other operating expense

34,158

  

20,217

  

39,036

  

28,372

 

Operating income

18,638

  

39,978

  

166,851

  

186,230

 
        

Interest expense

1,525

  

2,500

  

9,432

  

13,589

 

Other income, net

(1,308)

  

(2,244)

  

(5,684)

  

(11,094)

 

Total other expense, net

217

  

256

  

3,748

  

2,495

 
        

Income before income taxes

18,421

  

39,722

  

163,103

  

183,735

 

Provision for income taxes

5,690

  

8,173

  

41,941

  

46,086

 

Net income

12,731

  

31,549

  

121,162

  

137,649

 

Net income attributable to noncontrolling interests

(393)

  

(387)

  

(1,061)

  

(1,209)

 

Net income attributable to MSA Safety Incorporated

$

12,338

  

$

31,162

  

$

120,101

  

$

136,440

 
        

Earnings per share attributable to MSA Safety Incorporated common shareholders:

       

Basic

$

0.32

  

$

0.80

  

$

3.09

  

$

3.52

 

Diluted

$

0.31

  

$

0.79

  

$

3.05

  

$

3.48

 
        

Basic shares outstanding

38,981

  

38,762

  

38,885

  

38,653

 

Diluted shares outstanding

39,335

  

39,366

  

39,286

  

39,189

 
 

(a) Currency exchange losses for the twelve months ended December 31, 2019 includes a $15.4 million non-cash charge related to the recognition of currency translation adjustments associated with the closure of MSA’s South Africa affiliates.

MSA Safety Incorporated

Condensed Consolidated Balance Sheet (Unaudited)

(In thousands)

 
 

December 31,

2020

 

December 31,

2019

Assets

   

Cash and cash equivalents

$

160,672

  

$

152,195

 

Trade receivables, net

252,283

  

255,082

 

Inventories

197,819

  

185,027

 

Notes receivable, insurance companies

3,796

  

3,676

 

Other current assets

141,859

  

97,383

 

    Total current assets

756,429

  

693,363

 
    

Property, net

189,620

  

167,038

 

Prepaid pension cost

97,545

  

75,066

 

Operating lease assets, net

53,451

  

51,675

 

Goodwill

443,272

  

436,679

 

Notes receivable, insurance companies, noncurrent

48,540

  

52,336

 

Insurance receivable, noncurrent

82,926

  

56,169

 

Other noncurrent assets

200,701

  

207,367

 

   Total assets

$

1,872,484

  

$

1,739,693

 
    

Liabilities and shareholders’ equity

   

Notes payable and current portion of long-term debt, net

$

20,000

  

$

20,000

 

Accounts payable

86,854

  

89,120

 

Other current liabilities

203,691

  

168,389

 

   Total current liabilities

310,545

  

277,509

 
    

Long-term debt, net

287,157

  

328,394

 

Pensions and other employee benefits

208,068

  

186,697

 

Noncurrent operating lease liabilities

44,639

  

42,632

 

Deferred tax liabilities

10,916

  

9,787

 

Product liability and other noncurrent liabilities

201,268

  

162,101

 

Total shareholders’ equity

809,891

  

732,573

 

   Total liabilities and shareholders’ equity

$

1,872,484

  

$

1,739,693

 

MSA Safety Incorporated

Condensed Consolidated Statement of Cash Flows (Unaudited)

(In thousands)

 
 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

        

Net income

$

12,731

  

$

31,549

  

$

121,162

  

$

137,649

 

Depreciation and amortization

10,390

  

9,681

  

39,674

  

38,020

 

Product liability expense

34,158

  

18,464

  

39,036

  

26,619

 

Change in working capital and other operating

39,121

  

17,018

  

6,683

  

(37,326)

 

  Cash flow from operating activities

96,400

  

76,712

  

206,555

  

164,962

 
        

Capital expenditures

(16,207)

  

(13,081)

  

(48,905)

  

(36,604)

 

Acquisition, net of cash acquired

  

  

  

(33,196)

 

Change in short-term investments

(4,981)

  

22,614

  

(24,318)

  

5,425

 

Property disposals

120

  

95

  

454

  

218

 

  Cash flow (used in) from investing activities

(21,068)

  

9,628

  

(72,769)

  

(64,157)

 
        

Change in debt

(39,000)

  

(29,502)

  

(44,000)

  

(16,565)

 

Cash dividends paid

(16,767)

  

(16,308)

  

(66,578)

  

(63,523)

 

Other financing

5,381

  

2,019

  

(15,951)

  

(4,536)

 

  Cash flow used in financing activities

(50,386)

  

(43,791)

  

(126,529)

  

(84,624)

 
        

Effect of exchange rate changes on cash,

cash equivalents and restricted cash

2,902

  

1,136

  

1,234

  

(4,242)

 
        

Increase in cash, cash equivalents and restricted cash

$

27,848

  

$

43,685

  

$

8,491

  

$

11,939

 

MSA Safety Incorporated

Segment Information (Unaudited)

(In thousands, except percentage amounts)

 
 

Americas

 

International

 

Corporate

 

Consolidated

Three Months Ended December 31, 2020

       

Sales to external customers

$

244,518

  

$

143,730

  

$

  

$

388,248

 

Operating income

      

18,638

 

Operating margin %

      

4.8

%

Restructuring charges

      

8,906

 

Currency exchange losses, net

      

4,757

 

Product liability expense

      

34,158

 

Strategic transaction costs

      

515

 

Adjusted operating income (loss)

50,828

  

25,145

  

(8,999)

  

66,974

 

Adjusted operating margin %

20.8

%

 

17.5

%

   

17.3

%

Depreciation and amortization

      

10,390

 

Adjusted EBITDA

57,955

  

28,310

  

(8,901)

  

77,364

 

Adjusted EBITDA %

23.7

%

 

19.7

%

   

19.9

%

        

Three Months Ended December 31, 2019

       

Sales to external customers

$

235,419

  

$

139,836

  

$

  

$

375,255

 

Operating income

      

39,978

 

Operating margin %

      

10.7

%

Restructuring charges

      

2,643

 

Currency exchange losses, net

      

2,476

 

Product liability expense

      

18,464

 

Strategic transaction costs

      

1,463

 

Adjusted operating income (loss)

55,133

  

20,022

  

(10,131)

  

65,024

 

Adjusted operating margin %

23.4

%

 

14.3

%

   

17.3

%

Depreciation and amortization

      

9,681

 

Adjusted EBITDA

61,203

  

23,535

  

(10,033)

  

74,705

 

Adjusted EBITDA %

26.0

%

 

16.8

%

   

19.9

%

The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived.

Adjusted operating income (loss), adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA margin are the measures used by the chief operating decision maker to evaluate segment performance and allocate resources.  As such, management believes that adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are useful metrics for investors. Adjusted operating income (loss) is defined as operating income excluding restructuring charges, currency exchange gains / losses, product liability expense and strategic transaction costs, and adjusted operating margin is defined as adjusted operating income (loss) divided by segment sales to external customers.  Adjusted EBITDA is defined as adjusted operating income (loss) plus depreciation and amortization and adjusted EBITDA margin is defined as adjusted EBITDA divided by segment sales to external customers.  Adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are not recognized terms under GAAP and therefore do not purport to be alternatives to operating income or operating margin as a measure of operating performance.  The Company’s definition of adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin may not be comparable to similarly titled measures of other companies.  As such, management believes that it is appropriate to consider operating income determined on a GAAP basis in addition to these non-GAAP measures.

MSA Safety Incorporated

Segment Information (Unaudited)

(In thousands, except percentage amounts)

 
 

Americas

 

International

 

Corporate

 

Consolidated

Twelve Months Ended December 31, 2020

       

Sales to external customers

$

874,305

  

$

473,918

  

$

  

$

1,348,223

 

Operating income

      

166,851

 

Operating margin %

      

12.4

%

Restructuring charges

      

27,381

 

Currency exchange losses, net

      

8,578

 

Product liability expense

      

39,036

 

Strategic transaction costs

      

717

 

COVID-19 related costs

      

757

 

Adjusted operating income (loss)

200,536

  

70,864

  

(28,080)

  

243,320

 

Adjusted operating margin %

22.9

%

 

15.0

%

   

18.0

%

Depreciation and amortization

      

39,674

 

Adjusted EBITDA

227,298

  

83,385

  

(27,689)

  

282,994

 

Adjusted EBITDA %

26.0

%

 

17.6

%

   

21.0

%

        

Twelve Months Ended December 31, 2019

       

Sales to external customers

$

915,118

  

$

486,863

  

$

  

$

1,401,981

 

Operating income

      

186,230

 

Operating margin %

      

13.3

%

Restructuring charges

      

13,846

 

Currency exchange losses, net

      

19,814

 

Product liability expense

      

26,619

 

Strategic transaction costs

      

4,400

 

Adjusted operating income (loss)

226,596

  

59,910

  

(35,597)

  

250,909

 

Adjusted operating margin %

24.8

%

 

12.3

%

   

17.9

%

Depreciation and amortization

      

38,020

 

Adjusted EBITDA

251,287

  

72,848

  

(35,206)

  

288,929

 

Adjusted EBITDA %

27.5

%

 

15.0

%

   

20.6

%

The Americas segment is comprised of our operations in North America and Latin America geographies. The International segment is comprised of our operations in all geographies outside of the Americas. Certain global expenses are allocated to each segment in a manner consistent with where the benefits from the expenses are derived.

Adjusted operating income (loss), adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA margin are the measures used by the chief operating decision maker to evaluate segment performance and allocate resources.  As such, management believes that adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are useful metrics for investors. Adjusted operating income (loss) is defined as operating income excluding restructuring charges, currency exchange gains / losses, product liability expense, strategic transaction costs and COVID-19 related costs, and adjusted operating margin is defined as adjusted operating income (loss) divided by segment sales to external customers.  Adjusted EBITDA is defined as adjusted operating income (loss) plus depreciation and amortization and adjusted EBITDA margin is defined as adjusted EBITDA divided by segment sales to external customers.  Adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin are not recognized terms under GAAP and therefore do not purport to be alternatives to operating income or operating margin as a measure of operating performance.  The Company’s definition of adjusted operating income (loss), adjusted operating margin, adjusted EBITDA and adjusted EBITDA margin may not be comparable to similarly titled measures of other companies.  As such, management believes that it is appropriate to consider operating income determined on a GAAP basis in addition to these non-GAAP measures.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)

 

Consolidated

 
 

Three Months Ended December 31, 2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

20

%

(5)

%

(7)

%

(4)

%

(5)

%

%

3

%

 

10

%

 

3

%

Plus: Currency translation effects

(2)

%

(2)

%

2

%

%

(2)

%

(1)

%

(1)

%

 

(1)

%

 

(1)

%

Constant currency sales change

18

%

(7)

%

(5)

%

(4)

%

(7)

%

(1)

%

2

%

 

9

%

 

2

%

 
 
 

Twelve Months Ended December 31, 2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

4

%

(9)

%

(13)

%

(16)

%

(2)

%

(18)

%

(6)

%

 

15

%

 

(4)

%

Plus: Currency translation effects

%

%

3

%

1

%

%

1

%

%

 

1

%

 

1

%

Constant currency sales change

4

%

(9)

%

(10)

%

(15)

%

(2)

%

(17)

%

(6)

%

 

16

%

 

(3)

%

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management’s control. There can be no assurances that MSA’s definition of constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to this non-GAAP financial measure.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)

 

Americas Segment

 
 

Three Months Ended December 31, 2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

22

%

(3)

%

(11)

%

(12)

%

(7)

%

(14)

%

1

%

 

38

%

 

4

%

Plus: Currency translation effects

%

%

5

%

1

%

1

%

2

%

1

%

 

3

%

 

1

%

Constant currency sales change

22

%

(3)

%

(6)

%

(11)

%

(6)

%

(12)

%

2

%

 

41

%

 

5

%

 
 
 

Twelve Months Ended December 31,2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

4

%

(6)

%

(18)

%

(21)

%

(1)

%

(26)

%

(8)

%

 

25

%

 

(4)

%

Plus: Currency translation effects

1

%

%

4

%

2

%

1

%

3

%

2

%

 

4

%

 

1

%

Constant currency sales change

5

%

(6)

%

(14)

%

(19)

%

%

(23)

%

(6)

%

 

29

%

 

(3)

%

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management’s control. There can be no assurances that MSA’s definition of constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to this non-GAAP financial measure.

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Constant currency revenue growth (Unaudited)

 

International Segment

 
 

Three Months Ended December 31, 2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

16

%

(12)

%

4

%

12

%

(2)

%

22

%

6

%

 

(13)

%

 

3

%

Plus: Currency translation effects

(7)

%

(5)

%

(5)

%

(4)

%

(5)

%

(4)

%

(5)

%

 

(6)

%

 

(5)

%

Constant currency sales change

9

%

(17)

%

(1)

%

8

%

(7)

%

18

%

1

%

 

(19)

%

 

(2)

%

 
 
 

Twelve Months Ended December 31, 2020

 

Breathing

Apparatus

Firefighter

Helmets

and

Protective

Apparel

Industrial

Head

Protection

Portable

Gas

Detection

Fixed Gas

and Flame

Detection

Fall

Protection

Core

Sales

 

Non-Core

Sales

 

Net Sales

GAAP reported sales change

3

%

(21)

%

3

%

(6)

%

(3)

%

(6)

%

(3)

%

 

1

%

 

(3)

%

Plus: Currency translation effects

(1)

%

(1)

%

%

(1)

%

(2)

%

%

(1)

%

 

(1)

%

 

(1)

%

Constant currency sales change

2

%

(22)

%

3

%

(7)

%

(5)

%

(6)

%

(4)

%

 

%

 

(4)

%

Management believes that constant currency revenue growth is a useful metric for investors, as foreign currency translation can have a material impact on revenue growth trends. Constant currency revenue growth highlights ongoing business performance excluding the impact of fluctuating foreign currencies, which is outside of management’s control. There can be no assurances that MSA’s definition of constant currency revenue growth is consistent with that of other companies. As such, management believes that it is appropriate to consider revenue growth determined on a GAAP basis in addition to this non-GAAP financial measure.

MSA Safety Incorporated

Supplemental Segment Information (Unaudited)

Summary of constant currency revenue growth by segment and product group

 
 

Three Months Ended December 31, 2020

 

Consolidated

 

Americas

 

International

Breathing Apparatus

18

%

 

22

%

 

9

%

Fall Protection

(1)

%

 

(12)

%

 

18

%

Portable Gas Detection

(4)

%

 

(11)

%

 

8

%

Industrial Head Protection

(5)

%

 

(6)

%

 

(1)

%

Fixed Gas and Flame Detection

(7)

%

 

(6)

%

 

(7)

%

Firefighter Helmets and Protective Apparel

(7)

%

 

(3)

%

 

(17)

%

Core Sales

2

%

 

2

%

 

1

%

      

Non-Core Sales

9

%

 

41

%

 

(19)

%

      

Net Sales

2

%

 

5

%

 

(2)

%

  
  
 

Twelve Months Ended December 31, 2020

 

Consolidated

 

Americas

 

International

Breathing Apparatus

4

%

 

5

%

 

2

%

Fall Protection

(17)

%

 

(23)

%

 

(6)

%

Portable Gas Detection

(15)

%

 

(19)

%

 

(7)

%

Industrial Head Protection

(10)

%

 

(14)

%

 

3

%

Fixed Gas and Flame Detection

(2)

%

 

%

 

(5)

%

Firefighter Helmets and Protective Apparel

(9)

%

 

(6)

%

 

(22)

%

Core Sales

(6)

%

 

(6)

%

 

(4)

%

      

Non-Core Sales

16

%

 

29

%

 

%

      

Net Sales

(3)

%

 

(3)

%

 

(4)

%

MSA Safety Incorporated

Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures

Adjusted earnings (Unaudited)

Adjusted earnings per diluted share (Unaudited)

(In thousands, except per share amounts)

 
 

Three Months Ended

December 31,

   

Twelve Months Ended

December 31,

  
 

2020

 

2019

 

%

Change

 

2020

 

2019

 

%

Change

            

Net income attributable to MSA Safety Incorporated

$

12,338

  

$

31,162

  

(60)%

 

$

120,101

  

$

136,440

  

(12)%

Non-deductible non-cash charge related to the recognition of currency translation adjustments (a)

  

    

  

15,359

   

Tax charges associated with restructuring activities

1,119

  

584

    

1,119

  

584

   

Tax benefit associated with ASU 2016-09: Improvements to employee share-based payment accounting

(266)

  

(98)

    

(1,965)

  

(2,278)

   

Subtotal

13,191

  

31,648

  

(58)%

 

119,255

  

150,105

  

(21)%

            

Product liability expense

34,158

  

18,464

    

39,036

  

26,619

   

Restructuring charges

8,906

  

2,643

    

27,381

  

13,846

   

Currency exchange losses, net

4,757

  

2,476

    

8,578

  

4,455

   

Strategic transaction costs

515

  

1,463

    

717

  

4,400

   

Asset related losses and other

47

  

100

    

993

  

371

   

Income tax expense on adjustments

(11,716)

  

(5,914)

    

(19,330)

  

(11,826)

   

Adjusted earnings

$

49,858

  

$

50,880

  

(2)%

 

$

176,630

  

$

187,970

  

(6)%

            

Adjusted earnings per diluted share

$

1.27

  

$

1.29

  

(2)%

 

$

4.50

  

$

4.80

  

(6)%

 

 (a) Included in Currency exchange losses, net on the Condensed Consolidated Statement of Income.

Management believes that adjusted earnings and adjusted earnings per diluted share are useful measures for investors, as management uses these measures to internally assess the company’s performance and ongoing operating trends. There can be no assurances that additional special items will not occur in future periods, nor that MSA’s definition of adjusted earnings is consistent with that of other companies. As such, management believes that it is appropriate to consider both net income determined on a GAAP basis as well as adjusted earnings.

About MSA:

 

Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures.  Many MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations.  The company’s comprehensive product line is used by workers around the world in a broad range of markets, including fire service, the oil, gas and petrochemical industry, the construction industry, mining and the military.  MSA’s core products include self-contained breathing apparatus, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel, and fall protection devices.  With 2020 revenues of $1.35 billion, MSA employs approximately 5,000 people worldwide.  The company is headquartered north of Pittsburgh in Cranberry Township, Pa., and has manufacturing operations in the United States, Europe, Asia and Latin America.  With more than 40 international locations, MSA realizes approximately half of its revenue from outside North America.  For more information visit MSA’s web site at www.MSAsafety.com.

Cautionary Statement Regarding Forward-Looking Statements:

 

Except for historical information, certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to all projections and anticipated levels of future performance. Forward looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Any number of factors could cause actual results to differ materially from projections or forward looking statements, including without limitation global economic conditions, spending patterns of government agencies, competitive pressures, the impact of acquisitions and related integration activities, product liability claims, the success of new product introductions, currency exchange rate fluctuations and the risks of doing business in foreign countries. A full listing of these risks, uncertainties and other factors are detailed from time-to-time in our filings with the United States Securities and Exchange Commission (“SEC”), including our most recent Form 10-K filed on February 20, 2020. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties.  MSA’s SEC filings are readily obtainable at no charge at www.sec.gov, as well as on its own investor relations website at http://investors.MSAsafety.com. MSA undertakes no duty to publicly update any forward looking statements contained herein, except as required by law.

Non-GAAP Financial Measures:

 

This press release includes certain non-GAAP financial measures. These financial measures include constant currency revenue growth, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings, and adjusted earnings per diluted share. The presentation of these financial measures does not comply with U.S. generally accepted accounting principles (“GAAP”). For an explanation of these measures, together with a reconciliation to the most directly comparable GAAP financial measure, see the Reconciliation of As Reported Financial Measures to Non-GAAP Financial Measures in the financial tables section above.

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